What is the most important thing to compare when looking at home loans?

The comparison rate is the most useful single number. It combines the interest rate and most fees into one percentage, giving a truer cost than the headline rate alone. However, it is calculated on a $150,000 benchmark loan, so it may not reflect your exact situation.

How do I know what home loan rate I'll actually get?

The rate you receive depends primarily on your Loan-to-Value Ratio (LVR), loan purpose (owner-occupier or investor), repayment type (P&I or interest-only), and credit profile. The advertised rate typically applies to the best-case scenario at the lowest LVR tier. Filter by your actual LVR to see realistic rates.

Is it better to compare home loans through a broker or directly?

Both have trade-offs. Brokers access multiple lenders and save you time, but are paid by commission which can influence recommendations. Going direct gives you one lender's full range and may allow negotiation without commission built in. Using a comparison tool first helps you benchmark either approach.

What fees should I check when comparing home loans?

Focus on annual package fees (up to $395/year, costing nearly $12,000 over 30 years), upfront application and valuation fees, offset account fees, and discharge fees if you plan to refinance later. A low-rate loan with high fees can cost more than a slightly higher rate with no fees.

Can I compare fixed and variable home loans side by side?

You can view them together, but comparing them directly is misleading. Fixed and variable rates serve different purposes and carry different risks. Always compare fixed rates against other fixed rates, and variable against variable, to get a meaningful result.

How to Compare Home Loans in Australia

Why Most Home Loan Comparisons Miss the Point

Most people compare home loans by sorting a table from lowest rate to highest and picking the top result. It seems logical - but it regularly leads to worse outcomes. The advertised rate is often the narrowest slice of the picture: it ignores fees that add thousands over the loan term, LVR tiers that mean you won't qualify for that rate anyway, and features like offset accounts whose value dwarfs a 0.05% rate difference.

With 2360 home loan products from 66+ lenders currently tracked on RatePilot, the spread between the cheapest and most expensive variable rate is substantial. This guide walks through how to compare home loans methodically - the same framework a mortgage broker would use, but without the commission bias.

Step 1: Start with the Comparison Rate, Not the Headline Rate

The advertised interest rate is designed to get your attention. The comparison rate is designed to tell you the truth.

The comparison rate folds the interest rate and most standard fees into a single percentage, calculated on a benchmark loan of $150,000 over 25 years. It is the closest thing to an apples-to-apples number across different lenders.

The best variable comparison rate currently available is around 5.43% p.a., but the gap between headline and comparison rate can be meaningful:

Scenario	Headline Rate	Comparison Rate	Difference
Low-fee online lender	5.89%	5.92%	0.03%
Big 4 package deal	6.14%	6.42%	0.28%
Package + offset + annual fee	6.29%	6.71%	0.42%

Rates are illustrative. Actual rates vary by lender, LVR, and borrower profile.

Key point: A loan that looks 0.20% cheaper on the headline rate can be 0.30% more expensive on the comparison rate once fees are factored in.

For a deeper explanation, see our guide on how to read a comparison rate. And for why even the comparison rate can mislead, read The Comparison Rate Lie.

Step 2: Understand LVR Tiers

The rate you see advertised is almost never the rate you'll get. Most lenders price their home loans across LVR tiers - the lower your Loan-to-Value Ratio, the lower your rate.

LVR is calculated as:

LVR = (Loan Amount / Property Value) x 100

A $600,000 loan on a $750,000 property = 80% LVR.

Why this matters for comparison

LVR Band	Typical Rate Premium vs Best	LMI Required?
Under 60%	Lowest rate available	No
60-70%	+0.00% to +0.10%	No
70-80%	+0.05% to +0.20%	No
80-90%	+0.15% to +0.40%	Usually yes
90%+	+0.30% to +0.60%	Yes

Premiums are illustrative and vary by lender.

The advertised "from" rate typically applies at 60% LVR or below. If your LVR is 85%, you could be paying 0.30% or more above the advertised rate - and you'll also face Lenders Mortgage Insurance (LMI), which can add $10,000+ to your upfront costs.

RatePilot's home loan comparison tool lets you filter by your actual LVR so you see rates you'll genuinely qualify for - not aspirational ones.

Step 3: Fixed vs Variable - Compare Within Type

Never compare a fixed rate against a variable rate directly. They serve different purposes and carry different risks.

Variable rates move with the market. Currently from 5.43% p.a.. You get flexibility (offset, extra repayments, redraw) but no certainty on what you'll pay next month.
Fixed rates lock in a rate for 1-5 years. Currently from 5.49% p.a. for 2-year terms. You get payment certainty but lose flexibility - and face break costs if you exit early.

For a full breakdown of the trade-offs, see our guide on fixed vs variable home loans.

The comparison trap

A common mistake is choosing fixed because the rate looks lower than variable. But fixed rates are priced based on where the market expects rates to go. If fixed is lower than variable, it often means banks expect rates to fall - which means your variable rate may drop below your fixed rate within months.

Step 4: Check the Fees That Actually Matter

Home loan fees are where lenders make up for low headline rates. Here are the ones that move the needle:

Fee	Typical Range	Impact Over 30 Years
Annual/monthly package fee	$0-$395/year	$0-$11,850
Upfront application fee	$0-$600	One-off
Valuation fee	$0-$300	One-off
Discharge/settlement fee	$150-$400	One-off
Offset account fee	$0-$10/month	$0-$3,600
Rate lock fee	0.15%-0.20% of loan	Fixed loans only

Ranges are illustrative based on current market observations.

The biggest recurring cost is the annual package fee ($350-$395 at the Big 4). Over 30 years, that's nearly $12,000 - which only makes sense if the package rate discount saves you more than the fee costs.

Step 5: Value the Features, Not Just the Rate

A 0.10% rate difference on a $600,000 loan is $600/year. An offset account with $50,000 in it saves roughly $3,000/year at current rates. The maths is clear - features can matter far more than small rate differences.

Features worth comparing

Offset account - your savings balance reduces the loan principal you pay interest on. Particularly valuable if you maintain a healthy savings buffer. See our deep dive: Is Your Offset Account Actually Costing You Money?
Redraw facility - access extra repayments you've made. Less flexible than offset but usually free.
Extra repayments - the ability to pay more without penalty. Critical for paying off your loan faster. See How to Pay Off Your Home Loan Faster.
Portability - can you take the loan with you if you move house?
Split loan option - fix a portion and leave the rest variable.

For a detailed comparison of offset vs redraw, see our guide on offset account vs redraw facility.

Step 6: Owner-Occupier vs Investor

Lenders price differently based on loan purpose:

Owner-occupier loans are cheaper because they're considered lower risk.
Investment loans typically carry a 0.20-0.50% premium.

Within each category, you'll also see different rates for:

Principal & Interest (P&I) - lower rate, you're paying down the debt.
Interest Only (IO) - higher rate (typically 0.30-0.60% premium), common for investors but more expensive overall.

Always compare within your actual loan purpose and repayment type. A rate that looks competitive for an owner-occupier P&I loan may not even be available for an investor IO loan.

For investors, read our Investment Property Loan Guide.

Home Loan Comparison Checklist

Use this when evaluating any home loan offer:

Criteria	What to Check	Done
Comparison rate	Is it competitive at your LVR?	_
LVR tier	What rate do you actually qualify for?	_
Rate type	Fixed or variable? Comparing like-for-like?	_
Loan purpose	Owner-occupier or investor pricing?	_
Repayment type	P&I or interest-only?	_
Annual fees	Package fee justified by the rate discount?	_
Offset account	Available? Any additional monthly fee?	_
Extra repayments	Allowed without penalty?	_
LMI	Required at your LVR? How much?	_
Exit fees/discharge	Cost to refinance away later?	_

Best Variable Home Loan Rates Right Now

Lender	Product	Rate	Comparison	Features
Bank of China	Discount Home Loan (With Principal And Interest Repayment) (Variable)	5.43%	5.64%	RedrawExtra
Bank of China	Discount Plus Home Loan (With Principal And Interest Repayment) (Variable)	5.43%	5.82%	OffsetRedrawExtra
Up	Up Home Loan (Variable)	5.45%	5.45%	OffsetRedrawExtra
HSBC	Home Value Loan (Variable)	5.49%	5.50%	RedrawExtra
HSBC	Home Value Loan (Variable)	5.54%	5.55%	RedrawExtra
ME Bank	Me Bank Econome Home Loan (Variable)	5.58%	5.60%	RedrawExtra

For fixed rate options, see our full home loan rate comparison.

Common Mistakes When Comparing Home Loans

1. Chasing the lowest headline rate

The lowest advertised rate often applies at sub-60% LVR with no offset, no package, and strict conditions. Compare based on your actual borrowing profile.

2. Ignoring the comparison rate

Two loans with identical headline rates can differ by 0.30% or more on the comparison rate once fees are included. The comparison rate is not perfect, but it is a better starting point than the headline.

3. Not filtering for your LVR

A rate table sorted by headline rate will show you rates you can't get. Always filter by your actual Loan-to-Value Ratio.

4. Undervaluing offset accounts

If you keep meaningful savings, an offset account can save you more than any rate discount. Run the numbers using our offset calculator.

5. Comparing fixed to variable directly

They're different products for different needs. Compare fixed rates against other fixed rates, and variable against variable.

6. Not considering refinancing costs later

The cheapest loan today may have high discharge fees or clawback provisions that make it expensive to leave. For a full guide on the refinancing process, see How to Refinance Your Home Loan.

Broker vs Direct: Does It Matter?

You can compare home loans through a mortgage broker or go directly to lenders. Each approach has trade-offs:

Brokers can access multiple lenders and do the legwork for you, but they're paid by commission - which can create subtle conflicts of interest.
Going direct means you're only seeing one lender's products, but you may negotiate a better deal without the broker's commission built in.

For a detailed analysis, see Mortgage Broker vs Bank Direct.

The Bottom Line

Comparing home loans properly means going beyond the headline rate. Filter by your actual LVR, compare within the same rate type and loan purpose, check the comparison rate, and value features like offset accounts that can save you more than a small rate difference.

Start comparing with RatePilot's home loan comparison tool - filter by LVR, rate type, and features to find loans that match your actual situation.

For first home buyers, our First Home Buyer Grants guide covers the schemes and grants available in each state.

This is general information, not financial advice. Consider your own circumstances before making financial decisions. Product information is sourced from RatePilot's database and is updated regularly. Rates, fees, and terms are subject to change - always confirm with the provider.